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School Choice Works for Tight Times

The economy’s on the skids and perhaps still heading toward a cliff. State budgets are in the hole after years of unsustainable increases, and a lot of states are talking about program cuts andtax increases.

We are all in desperate need of practical policies that save money. And there just happens to be a reform that can save huge amounts from education, the biggest expense in state and local budgets: school choice.

A large-scale education tax credit can help get us through these lean times without tax increases, and it’s the financial argument that will get a major choice program passed.

States are spending much more on k-12 education than even Medicaid, a program continually singled out as a budget-buster. At 25 percent of all state-derived expenditures, it’s almost double Medicaid’s 13 percent share. State spending on K-12 education dwarfs any other category and it’s the biggest item on the local level too. And since education is such a big budget item, increased efficiency in education spending brings huge savings.

A recent fiscal analysis of the Cato’s Institute’s broad-based education tax credit program demonstrates that it can save states billions of dollars. New York could save more than $6 billion over the first five years alone, while Illinois could save more than $3 billion and South Carolina more than $400 million. And even the small programs already up and running had saved taxpayers more than $444 million by 2006.

It’s no surprise that a recession and stock market in turmoil will make people more appreciative of the cost-saving benefits of a policy. But even without the economic turmoil, highlighting the financial benefits of school choice is the most effective way of increasing public support for an already popular policy.

Well before the recent financial crisis, I conducted a placebo-controlled experiment with more than 2,800 respondents - the same kind of methodology that’s used in medical drug trials - that showed support for school choice increases the most when the economic benefits are emphasized. Indeed, the financial argument was the only one tested that increased support for education tax credits, which have proven the most popular and easily passed school choice policy in recent years.

School choice supporters tend to focus on the equity side of the argument for choice, emphasizing how poor and minority children are being left to fail in terrible schools. But making this argument is telling most people something that they already know; they’re either already persuaded or, if they’re not, telling them again won’t make any difference.

Most people already accept that private schools are better than public ones on average, and that kids - particularly poor kids - will benefit from being able to choose a school. But the public assumes that the improvement will be marginal and that the cost of school choice will be huge. And why not? Name a policy in the last 50 years that was supposed to massively improve the lot of poor families that actually delivered on its promises and didn’t cost taxpayers a bundle.

What people don’t realize is that school choice saves huge amounts of money. They don’t know that they’re paying around $12,000 a year per student in California, $25,000 in Washington, D.C., or $20,000 in New York, $18,000 in New Jersey and $14,000 in Virginia. And the public certainly doesn’t know that the median full tuition paid at U.S. private schools is just $4,000. So how in the world could they guess that school choice actually saves money?

That’s why emphasizing the documented cost savings from school choice is so powerful: people are already convinced choice will help kids at least a little, so when you remove the public’s huge fears about cost, they’re much more likely to support school choice. The same misconceptions plague lawmakers, who think every program is another outlay and less revenue for them to play with. But school choice could be their savior in a time of growing budget shortfalls - and the state and local budget crises have just begun.

School choice provides a unique opportunity for politicians: significant savings and a popular reform that improves education. Sure, the teachers unions will scream. But the 14 states that already have private school choice programs prove the union bark can be worse than its bite. And the state of the economy will give lawmakers a powerful new argument for school choice, beyond the typical education reform and equity arguments that have done little to move the voting public.

States, school districts, and the average taxpayer simply can’t afford not to have school choice.